If you think you might be due a tax rebate a quick search will offer you no end of tax refunds and rebate services – but do they do anything you couldn’t do yourself? We’ll explain a little about how tax refunds occur and the kind of companies that can pursue any claim on your behalf.

Why might you be due a refund?

There are a variety of reasons you might be due a refund of overpaid tax – have a think about whether any of the most common ones might apply to you:

You’ve stopped work

The amount of tax you pay is based to some degree on your projected earnings for the year – so, most people can earn £11,500 before they pay tax – but rather than apply tax to just the part of the year beyond that tax-free amount, that tax that you’re expected to pay on your overall year’s earnings is applied right across the year. For example:

Your salary is £20,000 – meaning your monthly wage before deductions is around £1,667. If you paid tax only when you passed the £11,500 threshold, you would go nearly 7 months before you paid a penny in tax – at which point your income would drop dramatically. For consistency, HMRC spread the tax that will be paid on £8,500 of your income over the full 12 months of your employment.

What this does mean is that if your employment ends and you’re left without work, you’ve probably paid too much tax. How much depends on where in the tax year you are – but HMRC can usually do the calculation for you.

You’ve sent an incorrect tax return

There are occasions where it becomes apparent that your self-assessment return is incorrect – and since HMRC use this to calculate your tax then subsequent calculations could now be wrong. Your tax return might inadvertently be wrong if you’ve sent it then stopped being self-employed too – especially if you have forward payments on your account with HMRC.

Issues that relate to self-assessment tax returns are often rectified without any prompting of HMRC, but if you’re not certain it’s being processed, calling and prompting them doesn’t hurt.

Your tax code is wrong

If you’re employed but you’re being taxed an incorrect amount it could be that your tax code is incorrect. Your tax code depends on your unique circumstances – although it will most often be a common one – like 1150L for example.

If you think you’re being taxed an incorrect amount, talking to your company payroll team is a good first step, if you’re not 100% happy with the answer, talk to HMRC – they’ll check some of your details and help you work out if you’re paying the correct amount of tax. Errors can happen for any number of reasons – it’s your responsibility to make sure everything’s correct.

You’ve used any of your own money for your job

There are instances when employed people might be required or expected to pay towards their training costs, fuel and in-work travel expenses, uniforms, tools and other such costs. If this is the case you’ve used some of your own money toward work expenses – and if your workplace doesn’t allow you to reclaim those directly, you might be able to reclaim these costs against your tax. Making sure you keep a record of costs is important in this instance.

Doing it yourself

When you call the HMRC you’ll be put through to someone who’ll check your security details and answer questions based on the enquiry that’s taken you to them. This might be that you believe your tax code is incorrect – so the person on the end of the phone will support you through working out whether this is correct – and dealing with any refund that might apply.

As you’d expect from any courteous call-centre – the call will usually wrap up after you’ve politely said “no thank you” when they’ve asked if there’s anything else they can help you with. You might be saying “no thank you” – but do you know for certain that there’s no other area in which your tax could be wrong?

Generally speaking, when an individual handles any tax rebate claim themselves they’ll be focused on just one aspect of the claim – now, don’t misunderstand – any rebate is great news, but unless you’re certain that you’ve covered all the possible bases – you might be missing out.

Working with a tax rebate company

“They won’t do anything you can’t do yourself” – is often the message when you’re considering dealing with a company who’ll pursue a claim on your behalf – and while that might be true, the real question is this:

Do you have the depth of tax knowledge to know you’re 100% asking every question of HMRC to ensure you’re getting back everything you’re entitled to?

If you’re an accountant the answer is probably ‘yes’ – but few of us are, so when the cost is so little – and generally only claimed as a small percentage of any rebate that you actually get, then it might make sense to turn to someone who’s definitely going to ask all the right questions – after all, it’s better to have 90% of £2,500 than it is to have 100% of £1000!

Who to choose

While there are a lot of generic services that will support you if you’re employed, self-employed or the director of a limited company, there are also companies who specialise in people who work in specific areas. For example, there are specialist tax rules for those who work as a subcontractor in construction – and others for people who are serving in the armed forces.

If you think your area of work might be subject to special tax rules – you might want to work with a company who knows your industry well. If you’re happy with the service a more generic company offers – then that’s fine too. You’ll be able to talk with them and they’ll leave no stone unturned in your enquiry about overpayment of tax.

Be careful

While getting a rebate can be great news – it’s important that you’re careful. Whether or not you’re dealing with a rebate company – there are instances when online scammers and fraudsters use HMRC logos, names and addresses to communicate with you over the telephone or via email. As a rule of thumb, HMRC will never get in touch with you by any means other than sending a letter – so be cautious if they appear to.

Good luck!

There’s no better feeling than having some tax repaid – especially if you didn’t know you were overpaying in the first place!

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